Purchasing A Property In Joint Names | What You NEED To Know

Podcast Hosts:

Gemma (Host)
Ifthikhar (Ifthi) – Trained Accountant, Mortgage Broker, and Founding Director at WIS

Introduction

Gemma:
There are lots of advantages to buying a property in joint names, but did you know there are also some drawbacks? It’s often really good to get specialist advice in this area.
There are two main types of joint property purchases available at the moment. Today, we’ll be talking about:
The methods of joint purchase
Which one might suit you
Some of the drawbacks

Q&A Discussion

Q1: How many people can be involved in a property purchase?
Ifthi:
Most common: two people (husband & wife, partners, or cohabiting).
But up to four people can be on a mortgage – this is the maximum allowed by the Land Registry and mortgage companies.
More common with buy-to-let properties, where groups of four invest together.
Of course, one person can also purchase individually.

Q2: Why do people buy property jointly?
Ifthi:
Inheritance Protection
If one person dies and only their name is on the property, the spouse/partner may have to go to court to claim ownership.
With joint ownership, the property automatically passes to the surviving owner, avoiding legal complications.
Bigger Deposit
Combining deposits (e.g., £10k + £10k) gives access to better mortgage rates.
Higher Borrowing Power
Joint incomes are considered together, allowing for larger mortgage amounts.
Tax Planning
Income from properties can be split between owners for tax efficiency.
Capital Gains Tax allowances can also be doubled in joint ownership (£12,500 × 2).

Q3: What happens if the main breadwinner dies and the surviving partner is on the mortgage?
Ifthi:
The bank usually gives a grace period to sort things out.
If the surviving partner isn’t on the mortgage, the process is much harder.
If they are on the mortgage, the bank is more sympathetic, though affordability may still be an issue.

Q4: What are the drawbacks of purchasing property jointly?
Ifthi:
Unequal Contributions
If one person pays 75% of the deposit but ownership defaults to 50/50, that can cause unfairness (unless structured differently).
Financial Link
Both owners are jointly and severally liable.
If one person misses payments, it affects both credit records.
Mortgage Liability
All owners must be on the mortgage, even if not contributing financially.
E.g., parents helping children might find themselves tied into the mortgage long-term.

Q5: What types of joint ownership are available?
Ifthi:
There are two main types:
Joint Tenancy
Default option.
Each owner has 50% ownership.
On death, the property automatically passes to the surviving joint owner.
Tenancy in Common
Ownership can be split into percentages (e.g., 75/25).
On death, the deceased’s share can be left to children, family, or others (via a will).
Useful for friends investing together or couples with unequal contributions.

Q6: What are the benefits of Tenancy in Common?
Ifthi:
Flexible Shares: Ownership can reflect actual contributions.
Inheritance Control: You can leave your share to children, even from a previous relationship.
Tax Benefits: Profits can be split strategically for tax planning (e.g., giving more share to a lower taxpayer).
Estate Planning: Helps avoid unwanted parties inheriting assets (e.g., new spouses).

Q7: Does Tenancy in Common mean limited rights to the property?
Ifthi:
No – all owners have equal rights of use, regardless of share percentage.
Even someone with 10% ownership can use the entire property.

Q8: Can someone live in a property without being an owner?
Ifthi:
Yes, e.g., one partner may own 100% while the other contributes nothing financially.
However, courts may still award rights to the non-owning partner if they sacrificed income (e.g., staying home to care for children).
Rights can apply even in non-married partnerships, especially if children are involved.

Closing Remarks

Gemma:
Thank you, Ifthi, for the great advice. A quick reminder: these points may not apply to everyone, so please check with a broker if you’re unsure. If you don’t have a broker, WIS can help.
Also, remember:
A mortgage is secured against your home or property and it may be repossessed if you do not keep up with mortgage repayments.
We’ll be back next week with another episode of Let’s Talk Money & Mortgages.